The LHD/ERISA Advisor: Courts Say Abuse of Discretion Standard is "Highly Deferential" to Plan Administrator's Denial of Benefits

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In Rittinger v. Healthy Alliance Life Ins. Co., 914 F.3d 952 (5th Cir. Jan. 31, 2019), and Roebuck v. USAble Life, 380 F. Supp. 3d 852 (E.D. Ark. Mar. 30, 2019), the courts found no abuse of discretion where the ERISA plan administrators denied claims benefits, one involving an LTD claim and one in the healthcare context. While both courts found in the plan administrator's favor, the Fifth Circuit's decision especially emphasized the abuse of discretion standard's highly deferential nature, which required the administrator to demonstrate merely "more than a scintilla of evidence" in support of its position.

In Rittinger, the Fifth Circuit held that the ERISA plan administrator, Anthem, did not abuse its discretion in concluding that the plan excluded coverage for the claimant's (Rittinger) bariatric surgery. The plan in question excluded "bariatric surgery, regardless of the purpose it is proposed or performed," but nevertheless covered "excessive nausea/vomiting." Rittinger underwent bariatric surgery and suffered complications that resulted in follow-up surgery and intensive care. Anthem denied coverage and affirmed the denial in response to Rittinger's first-level internal appeal. In her second-level appeal, Rittinger argued that the "excessive nausea/vomiting" exception applied because she had suffered from Gastroesophageal Reflux Disease (GERD) and esophagitis, which were linked to nausea and vomiting, and underwent surgery to address those problems. Anthem affirmed the denial of coverage.

In Rittinger's ensuing lawsuit, the district court found that Anthem abused its discretion in denying the second-level appeal because it failed to give sufficient weight to Rittinger's evidence linking her GERD/esophagitis to her nausea and vomiting. The Fifth Circuit disagreed and reversed. The court explained that this "highly deferential standard of review" required affirmance of the administrator's decision where it is "supported by substantial evidence" – "more than a scintilla, less than a preponderance" – and "is not arbitrary or capricious." The Fifth Circuit concluded that Anthem cleared this "very low" threshold because Rittinger's intake medical record documented chief complaints of "morbid obesity and abdominal pain" and affirmatively noted "no vomiting" and "no nausea." The court further noted that nausea and vomiting did not appear in the administrative record until after the coverage dispute arose, when Rittinger and her friends submitted affidavits stating that she suffered from nausea and vomiting. Finding that "Anthem was not duty-bound to defer to shifting medical opinions" and was entitled to exercise its discretion in siding with one medical view over a competing view, the Fifth Circuit held that Anthem did not abuse its discretion in denying coverage.

The Roebuck court reached a similar conclusion in the LTD context. There, the claimant ("Roebuck"), a nurse engaged in the sedentary evaluation of health insurance claims, applied for disability benefits following a motor vehicle collision that caused pain in her neck, lower back, and wrist. USAble's medical consultant reviewed voluminous records from Roebuck's treatment providers and found them inconsistent and unclear on the issue of whether Roebuck was capable of sedentary work. A subsequent functional capacity evaluation (FCE) resulted in a finding that Roebuck was capable of working full-time, prompting USAble to deny benefits. Roebuck appealed and submitted 1,300 pages of medical records purporting to support her disability. USAble referred the new information to a second medical consultant, who similarly concluded that Roebuck's claimed disability was unsupported. USAble upheld the initial denial, and Roebuck sued.

In finding that USAble's denial of benefits was supported by substantial evidence, the court pointed to Roebuck's FCE, citing Eighth Circuit law to the effect that such an evaluation "alone constitutes more than a scintilla of evidence when the FCE concludes a benefits claimant does not meet an ERISA plan's 'disability' definition." The court found that Roebuck's FCE's conclusion that she was "able to tolerate the Sedentary level of work for the 8-hour/40-hour work week" provided "objective clinical evidence" that she was able to work. The court further based its holding on the findings of USAble's medical consultants, noting the lack of evidence that their compensation was tied to their findings, and further emphasizing that USAble was not required to give special weight to the opinions of Roebuck's treating physicians.

Finally, the court noted that USAble's dual role as plan administrator and insurer created a conflict of interest which must be considered in evaluating whether it abused its discretion. However, the court found that USAble's conflict was "reduced close to or to the vanishing point" because USAble retained an "independent" FCE provider, its in-house consultants considered Roebuck's medical records, and it thoroughly explained its claim decision. As such, the court held that USAble did not abuse its discretion and entered judgment in its favor.

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